Pakistan to buy less H2 fuel oil after import rush

SINGAPORE, June 9 (Reuters) Pakistan's fuel oil imports have soared to about a million tonnes in the first seven months, but will be limited to a few more cargoes for the rest of the year, as the wet season boosts hydro generation, industry sources said on Friday.

The country is expected to buy just over 1 million tonnes of the residual fuel for the whole year, up from about 500,000-600,000 tonnes in 2005, when lower-than-usual rainfall depleted hydropower generation.

''They have bought substantially more than usual in the first half of the year but with the rainy season approaching from August-September onwards, the expectation is that some of the hydroelectric power will be restored,'' a Middle East-based trader said.

''They have bought cargoes for delivery up till July and they could still buy a little more till the end of the year to feed their oil-fired plants. But the volumes won't be that large.'' The rainy season, brought by the southwest monsoon, sweeps over most of the country from late June until early October.

Pakistan State Oil (PSO) last issued a tender for nine cargoes totalling 495,000-550,000 tonnes of 125-180 centistoke (cst) material, for May-July delivery.

The tender includes four firm cargoes of 55,000-65,000 tonnes each, done at premiums of .25-.85 a tonne for the 180-cst parcels and .75-.35 for the 125-cst lots, and five optional lots.

PSO will take delivery of the firm cargoes but can choose not to take delivery of the optional ones. The number of optional cargoes the company will take is not disclosed.

In three separate tenders issued for January-June supplies, PSO sought 880,000-1.01 million tonnes but only took delivery of about 700,000-750,000 tonnes, mostly from Middle East traders, Bakri Trading and FAL Oil.

For the May-July tender, they are expected to take delivery of another 250,000 tonnes.

State-owned Water and Power Development Authority (WAPDA), the country's biggest utility, had to turn to fuel oil because water levels in major reservoirs are critically low after Pakistan got 40 percent less than normal winter rains and up to 25 percent less snowfall.

The utility generates 11,242 megawatts (MW) with from 35 percent hydropower, 49 percent gas-fired, 12.5 percent fuel oil, 3.1 percent nuclear and 0.2 percent is coal-fired.

WAPDA has had to bear the additional cost of using fuel oil, estimated at 9.5 billion rupees (8 million) as benchmark Singapore prices had risen by about 20 percent between January and May.

REUTERS PV PM1703